JSW May Partner Piramal-Bain Fund to Bid for Bhushan Steel
Final negotiations on between Jindal co and fund to put in joint bid for ailing steel maker
Mumbai: Billionaire Sajjan Jindal’s flagship JSW Steel is in advanced talks with a distressed fund jointly floated by Piramal Enterprises and Bain Capital Credit to bid for Bhushan Steel, which has recently been admitted to bankruptcy courts for possible revival.
“Both parties are in the final stages of negotiations to put together a joint bid for the distressed steel maker,” said a person close to the transaction. Bhushan is one of the 12 companies referred to bankruptcy courts by a Reserve Bank of India order in June.
India’s largest steel maker JSW Steel has been eyeing Bhushan Steel for more than a year now as it strives to ramp up output to 40 million tonnes in the next decade through capacity addition as well as acquisitions.
Jindal has a proven track record of turning around stressed busi- SBI + Brookfield Asset Management $ BILLION
IL&FS + Lone Star $ MILLION
JC Flowers and Co + Ambit Holdings $ MILLION
ICICI Bank + Apollo India Credit Opp Mgmt + AION Capital Not Announced
Any creditor(s) can apply for insolvency proceedings against a defaulting corporate
IP takes over running of the company
nesses. He had earlier acquired Ispat Steel and Southern Iron & Steel Company, and revived both. JSW officials are hoping to effect a similar turnaround for Bhushan.
Bhushan Steel’s total debt stands at about .₹ 42,355 crore and its efforts to find a partner have come a cropper so far. JSW Steel and Bhushan Steel did not respond to emailed queries while Piramal Enterprises refused to comment on ‘speculation’.
IP gets 180 days to offer a solution. Period can be extended by 90 days
Any resolution proposal can be implemented only if 75% of creditors approve it
The Application: Moratorium: Credit Committee:
Bhushan Steel, which primarily makes auto-grade steel, is majority owned by the Singal family. The company has been admitted by the National Company Law Tribunal, and now there’s a 180-day timeline that can be extended up to 270 days to decide on a resolution plan in accordance with the Insolvency and Bankruptcy Code. The Indian steel industry is showing signs of revival after a particularly tough year during which it fended off Chinese imports. The government’s focus on infrastructure and affordable housing has helped stoke demand while anti-dumping moves have helped the local industry.
Piramal and Bain’s distressed assets fund was floated in August 2016 and has a corpus of about $750 million, with an option to increase it to $1 billion. It seeks to invest in businesses that require restructuring and have fundamentally strong growth prospects linked to India’s infrastructure and consumption needs. If the deal goes through, Bhushan Steel would be its first investment. “We think the recent banking reforms focused on effective and timely resolution of stressed assets augur well for players like us,” Piramal Enterprises chairman Ajay Piramal had said last year at the fund’s launch. Investors — both local and foreign — are increasingly showing interest in the country’s stressed assets due to improved market sentiment and introduction of IBC even as gross non-performing assets (NPAs) have swelled to .₹ 7.7 lakh crore, as on March 31, 2017, representing 9.6% of the total banking industry loans.
Recently, one of India’s largest infrastructure lender, Infrastructure Leasing & Financial Services Ltd (IL&FS), formed a joint investment platform with American private equity fund Lone Star to bid for stressed infrastructure projects in the country. The platform would have a capital pool of $550 million. Global stressed asset specialist JC Flowers and Co, in partnership with Ambit Holdings, has applied to set up an asset reconstruction company.
Megha Mandavia & Baiju Kalesh